"Our operations performed well in the third quarter, with production of all metals tracking to annual guidance ranges. Despite persistent inflationary conditions,
"Chapada achieved a significant step-up in production and improvement in cash cost as the operation rebounded from the weather-impacted first half of the year. Strong operational performances continued at each of Candelaria, Eagle and Zinkgruvan. Progress continues to be made ramping up the
Summary Financial Results
Three months ended | Nine months ended | ||||
US$ Millions (except per share amounts) | 2022 | 2021 | 2022 | 2021 | |
Revenue | 648.5 | 756.4 | 2,229.8 | 2,310.2 | |
Gross profit | 82.5 | 303.9 | 607.3 | 936.6 | |
Attributable net (loss) earnings2 | (11.2) | 173.7 | 281.3 | 551.6 | |
Net (loss) earnings | (11.2) | 190.6 | 318.2 | 613.2 | |
Adjusted earnings 1,2 | 30.9 | 168.4 | 288.9 | 539.1 | |
Adjusted EBITDA1 | 202.4 | 411.3 | 938.8 | 1,246.5 | |
Basic and diluted earnings per share ("EPS")2 | (0.01) | 0.24 | 0.37 | 0.75 | |
Adjusted EPS1,2 | 0.04 | 0.23 | 0.38 | 0.73 | |
Cash flow from operations | 36.3 | 523.1 | 720.0 | 1,100.8 | |
Adjusted operating cash flow1 | 181.3 | 294.1 | 703.9 | 1,005.6 | |
Adjusted operating cash flow per share1 | 0.23 | 0.40 | 0.93 | 1.36 | |
Free cash flow1 | (116.4) | 407.0 | 284.9 | 762.0 | |
Cash and cash equivalents | 226.9 | 428.3 | 226.9 | 428.3 | |
Net cash1 | 177.6 | 390.7 | 177.6 | 390.7 | |
1 These are non-GAAP measures. Please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the three | |||||
2 Attributable to shareholders of |
Operational Performance
Zinc and nickel production was higher than the prior year quarter, with copper modestly below, but in-line with expectations. Production costs and cash costs[1] were higher this quarter than the prior year quarter primarily due to the year-to-date inflationary impacts on consumables, particularly diesel and electricity, as well as on contractor costs, partially offset by favourable foreign exchange.
Candelaria (80% owned): Candelaria produced 37,192 tonnes of copper, and approximately 21,000 ounces of gold in concentrate on a 100% basis in the quarter. Copper and gold production was higher than the comparable prior year quarter due to higher grades from Phase 10 of the open pit. Current quarter production costs and copper cash cost of
Chapada (100% owned): Chapada produced 13,988 tonnes of copper and approximately 24,000 ounces of gold in concentrate in the quarter. Copper and gold production was lower than the prior year quarter primarily due to processed ore types impacting grade and metal recoveries, however, production of both metals increased meaningfully over the first half of this year. Production costs were higher due to inflationary pressures on diesel, explosives and electricity. Copper cash cost of
Eagle (100% owned): During the quarter Eagle produced 4,379 tonnes of nickel, higher than the prior year quarter attributable to higher mill throughput and 3,994 tonnes of copper which was lower than the prior year quarter due to anticipated lower grades. Production costs were higher due to higher consumable costs. Nickel cash cost in the quarter of
Neves-Corvo (100% owned): Neves-Corvo produced 7,019 tonnes of copper for the quarter and 22,514 tonnes of zinc. Copper production was lower than the prior year comparable period, due primarily to lower throughput, while zinc production was higher primarily due to increased throughput driven by the ramp-up of the
Zinkgruvan (100% owned): Zinc production of 17,813 tonnes was lower than the prior year quarter due to lower grades while lead production of 7,046 tonnes was consistent with the prior year quarter. Production costs were higher due to inflationary increases on input costs partially offset by favourable foreign exchange. Zinc cash cost of
Total Production
(Contained metal in concentrate)a | 2022 | 2021 | |||||||
YTD | Q3 | Q2 | Q1 | Total | Q4 | Q3 | Q2 | Q1 | |
Copper (t)b | 193,107 | 63,930 | 64,096 | 65,081 | 262,884 | 76,996 | 65,077 | 63,457 | 57,354 |
Zinc (t) | 114,630 | 40,327 | 41,912 | 32,391 | 143,797 | 36,830 | 38,769 | 34,833 | 33,365 |
Gold (koz)b | 118 | 45 | 39 | 34 | 167 | 46 | 46 | 41 | 34 |
Nickel (t) | 13,379 | 4,379 | 4,719 | 4,281 | 18,353 | 4,101 | 4,124 | 4,774 | 5,354 |
a. Tonnes (t) and thousands of ounces (koz) | |||||||||
b. Candelaria's production is on a 100% basis. |
Corporate Updates
- On
July 19, 2022 , the Company announced the publication of its 2021 Sustainability Report, which highlighted its new Focused on the Future long-term sustainability strategy which included a 35% reduction target in greenhouse gas emissions by 2030. - On
July 27, 2022 , the Company announced that the Company's founder and former Chairman, Mr.Lukas H. Lundin , passed away. The Company also announced the appointment of Ms.Natasha Vaz to the Company's Board of Directors, and the following executive leadership appointments: Mr.Juan Andres Morel , Senior Vice President and Chief Operating Officer; Mr.Teitur Poulsen , Senior Vice President and Chief Financial Officer; Mr.David Dicaire , Senior Vice President,Josemaria Project ; and Ms.Kristen Mariuzza , Senior Vice President Sustainability, Health and Safety. - On
August 1, 2022 , the Company confirmed a sinkhole was detected near its Minera Ojosdel Salado operations inChile onJuly 30, 2022 . All mining operations at the Alcaparrosa underground mine were and remain suspended and the Company mobilized resources in support of the ongoing investigation. - On
October 1, 2022 , the Company reported a fatality of a contractor that occurred onSeptember 30, 2022 at its Neves-Corvo mine inPortugal . Operations were voluntarily suspended. The operation restarted onOctober 5, 2022 . The relevant regulatory authorities were notified and the Company continues to cooperate fully with those investigations. - On
October 12, 2022 , the Company announced the passing of Board member Ms. Karen Poniachik, who had served on the Board of Directors sinceFebruary 2021 .
Financial Performance
- Gross profit for the quarter ended
September 30, 2022 was$82.5 million , a decrease of$221.4 million in comparison to the prior year quarter due to higher operating costs impacted by inflationary impacts and lower metal prices net of price adjustments ($139.2 million ) partially offset by favourable foreign exchange. On a year-to-date basis, gross profit was also lower than the prior year comparative period by$329.2 million due to the same impacts. - For the three and nine months ended
September 30, 2022 , net loss of$11.2 million and net earnings of$318.2 million were$201.8 million and$295.0 million lower than the prior year comparable periods, respectively, due to lower gross profit and higher project development costs partially offset by lower income taxes. - Adjusted earnings of
$30.9 million and$289.0 million for the three and nine months endedSeptember 30, 2022 , respectively, were lower than the prior year comparable periods due to lower net earnings.
Financial Position and Financing
- Cash and cash equivalents as at
September 30, 2022 were$226.9 million , a decrease during the quarter of$271.3 million . Cash flow from operations of$36.3 million and cash on hand was used to fund investing activities of$227.6 million , for payments of shareholder dividends of 53.0 million and share repurchases which amounted to$42.1 million . - On a year-to-date basis, cash and cash equivalents decreased by
$367.1 million . Cash flow from operations of$720.0 million was used to fund investing activities of$733.1 million , which includes the Josemaria Resources acquisition. Financing activities included the payment of shareholder dividends of$224.3 million ,$50.2 million in share re-purchases,$47.0 million in Josemaria debentures paid and distributions amounting to$35.0 million to non-controlling interest. - As at
September 30, 2022 , the Company had a net cash balance of$177.6 million . Net cash decreased during the quarter and on a year-to-date basis due to the activities described above for cash and cash equivalents. - As at
October 25, 2022 , the Company had cash and net cash balances of approximately$255.0 million and$205.0 million , respectively.
The Company continues to experience continuing risks associated with global inflation as well as supply chain delivery. To date, there have been no significant impacts on our operations relating to supply chain availability. The Company has implemented procurement strategies and a foreign exchange hedging program to mitigate the impact and continues to monitor these risks.
Total copper, zinc, gold and nickel production are all tracking to the most recently reported guidance ranges as outlined in the MD&A for the three and six months ended
Forecast cash costs remain consistent with most recently reported guidance for Candelaria and Chapada of
Total capital expenditures are tracking well to the most recent guidance of
The total expected spend for the
The information in this release is subject to the disclosure requirements of
The scientific and technical information in this press release has been prepared in accordance with the disclosure standards of National Instrument 43-101 ("NI 43-101") and has been reviewed and approved by
The Company uses certain performance measures in its analysis. These performance measures have no standardized meaning within generally accepted accounting principles under International Financial Reporting Standards and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. For additional details please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the three and nine months ended
Adjusted EBITDA can be reconciled to the Company's Consolidated Statement of Earnings as follows:
Three months ended | Nine months ended | ||||
($thousands) | 2022 | 2021 | 2022 | 2021 | |
Net (loss) earnings | (11,245) | 190,580 | 318,238 | 613,231 | |
Add back: | |||||
Depreciation, depletion and amortization | 140,161 | 120,637 | 412,040 | 377,397 | |
Finance income and costs | 15,240 | 10,143 | 47,521 | 30,317 | |
Income taxes | 10,766 | 105,675 | 136,975 | 238,191 | |
154,922 | 427,035 | 914,774 | 1,259,136 | ||
Unrealized foreign exchange | 14,426 | (2,731) | 25,000 | 3,527 | |
Unrealized foreign exchange and trading gains on equity investments | 18,848 | — | — | — | |
Income from investment in associates | 78 | (21,088) | (3,297) | (22,234) | |
Sinkhole costs | 7,789 | — | 7,789 | — | |
Write-down of fixed assets | 3,617 | — | 3,619 | 6,488 | |
Gain on disposal of subsidiary | — | — | (16,828) | — | |
Other | 2,693 | 8,080 | 7,733 | (455) | |
Total adjustments - EBITDA | 47,451 | (15,739) | 24,016 | (12,674) | |
Adjusted EBITDA | 202,373 | 411,296 | 938,790 | 1,246,462 | |
Adjusted earnings and adjusted earnings per share can be reconciled to the Company's Consolidated Statement of Earnings as follows:
Three months ended | Nine months ended | ||||
($thousands, except share and per share amounts) | 2022 | 2021 | 2022 | 2021 | |
Net (loss) earnings attributable to | (11,212) | 173,740 | 281,289 | 551,568 | |
Add back: | |||||
Total adjustments - EBITDA | 47,451 | (15,739) | 24,016 | (12,674) | |
Tax effect on adjustments | (12,012) | (3,556) | (11,323) | (2,729) | |
Deferred tax arising from foreign exchange translation | 5,599 | 14,436 | (6,264) | 3,211 | |
Other | 1,070 | (460) | 1,197 | (305) | |
Total | 42,108 | (5,319) | 7,626 | (12,497) | |
Adjusted earnings | 30,896 | 168,421 | 288,915 | 539,071 | |
Basic weighted average number of shares outstanding | 775,563,527 | 736,443,985 | 759,726,506 | 737,314,204 | |
Net (loss) earnings attributable to shareholders | (0.01) | 0.24 | 0.37 | 0.75 | |
Total adjustments | 0.05 | (0.01) | 0.01 | (0.02) | |
Adjusted earnings per share | 0.04 | 0.23 | 0.38 | 0.73 |
Adjusted operating cash flow and adjusted operating cash flow per share can be reconciled to cash provided by operating activities as follows:
Three months ended | Nine months ended | ||||
($thousands, except share and per share amounts) | 2022 | 2021 | 2022 | 2021 | |
Cash provided by operating activities | 36,331 | 523,104 | 719,999 | 1,100,777 | |
Changes in non-cash working capital items | 145,006 | (228,989) | (16,111) | (95,190) | |
Adjusted operating cash flow | 181,337 | 294,115 | 703,888 | 1,005,587 | |
Basic weighted average number of shares outstanding | 775,563,527 | 736,443,985 | 759,726,506 | 737,314,204 | |
Adjusted operating cash flow per share | $ 0.23 | 0.40 | 0.93 | 1.36 |
Free cash flow can be reconciled to cash provided by operating activities as follows:
Three months ended | Nine months ended | ||||
($thousands) | 2022 | 2021 | 2022 | 2021 | |
Cash provided by operating activities | 36,331 | 523,104 | 719,999 | 1,100,777 | |
Sustaining capital expenditures | (152,722) | (116,069) | (435,145) | (338,813) | |
Free cash flow | (116,391) | 407,035 | 284,854 | 761,964 |
Net cash can be reconciled as follows:
($thousands) | September | September |
Cash and cash equivalents | 226,949 | 428,300 |
Current portion of total debt and lease liabilities | (34,692) | (17,660) |
Debt and lease liabilities | (14,688) | (19,974) |
(49,380) | (37,634) | |
Net cash | 177,569 | 390,666 |
Cash and All-in Sustaining Costs can be reconciled to the Company's operating costs as follows:
Three months ended | ||||||
Operations | Candelaria | Chapada | Eagle | Neves-Corvo | Zinkgruvan | |
($000s, unless otherwise noted) | (Cu) | (Cu) | (Ni) | (Cu) | (Zn) | Total |
Sales volumes (Contained metal in concentrate): | ||||||
Tonnes | 35,587 | 12,817 | 3,715 | 8,574 | 13,722 | |
Pounds (000s) | 78,456 | 28,257 | 8,190 | 18,903 | 30,252 | |
Production costs | 425,814 | |||||
Less: Royalties and other | (8,593) | |||||
417,221 | ||||||
Deduct: By-product credits | (172,179) | |||||
Add: Treatment and refining | 28,829 | |||||
Cash cost | 154,633 | 54,147 | 8,637 | 50,888 | 5,566 | 273,871 |
Cash cost per pound ($/lb) | 1.97 | 1.92 | 1.05 | 2.69 | 0.18 | |
Add: Sustaining capital | 103,486 | 19,197 | 3,062 | 15,860 | 8,415 | |
Royalties | — | 3,055 | 5,705 | (1,213) | — | |
Interest expense | 1,368 | 1,720 | 400 | 33 | 20 | |
Leases & other | 2,910 | 1,082 | 4,893 | 770 | 1,091 | |
All-in sustaining cost | 262,397 | 79,201 | 22,697 | 66,338 | 15,092 | |
AISC per pound ($/lb) | 3.34 | 2.80 | 2.77 | 3.51 | 0.50 |
Three months ended | ||||||
Operations | Candelaria | Chapada | Eagle | Neves-Corvo | Zinkgruvan | |
($000s, unless otherwise noted) | (Cu) | (Cu) | (Ni) | (Cu) | (Zn) | Total |
Sales volumes (Contained metal in concentrate): | ||||||
Tonnes | 33,743 | 13,869 | 3,246 | 9,071 | 16,043 | |
Pounds (000s) | 74,390 | 30,576 | 7,156 | 19,998 | 35,369 | |
Production costs | 331,816 | |||||
Less: Royalties and other | (13,626) | |||||
318,190 | ||||||
Deduct: By-product credits | (160,394) | |||||
Add: Treatment and refining | 28,459 | |||||
Cash cost | 120,512 | 19,097 | (5,703) | 40,987 | 11,362 | 186,255 |
Cash cost per pound ($/lb) | 1.62 | 0.62 | (0.80) | 2.05 | 0.32 | |
Add: Sustaining capital | 74,326 | 16,425 | 3,539 | 13,191 | 8,486 | |
Royalties | — | 4,157 | 6,459 | 1,839 | — | |
Interest expense | 1,263 | 859 | 177 | 18 | 18 | |
Leases & other | 2,778 | 987 | 2,173 | 1,201 | 1,692 | |
All-in sustaining cost | 198,879 | 41,525 | 6,645 | 57,236 | 21,558 | |
AISC per pound ($/lb) | 2.67 | 1.36 | 0.93 | 2.86 | 0.61 |
Nine months ended | ||||||
Operations | Candelaria | Chapada | Eagle | Neves-Corvo | Zinkgruvan | |
($000s, unless otherwise noted) | (Cu) | (Cu) | (Ni) | (Cu) | (Zn) | Total |
Sales volumes (Contained metal in concentrate): | ||||||
Tonnes | 113,690 | 33,526 | 11,188 | 25,241 | 48,049 | |
Pounds (000s) | 250,643 | 73,912 | 24,665 | 55,647 | 105,930 | |
Production costs | 1,210,431 | |||||
Less: Royalties and other | (38,121) | |||||
1,172,310 | ||||||
Deduct: By-product credits | (487,914) | |||||
Add: Treatment and refining | 90,944 | |||||
Cash cost | 450,858 | 157,456 | 7,999 | 125,889 | 33,138 | 775,340 |
Cash cost per pound ($/lb) | 1.80 | 2.13 | 0.32 | 2.26 | 0.31 | |
Add: Sustaining capital | 272,557 | 63,412 | 10,445 | 49,136 | 31,537 | |
Royalties | — | 9,161 | 24,129 | 984 | — | |
Interest expense | 4,149 | 5,161 | 1,202 | 104 | 63 | |
Leases & other | 8,806 | 3,428 | 14,673 | 1,546 | 3,519 | |
All-in sustaining cost | 736,370 | 238,618 | 58,448 | 177,659 | 68,257 | |
AISC per pound ($/lb) | 2.94 | 3.23 | 2.37 | 3.19 | 0.64 | |
($000s, unless otherwise noted) | 2022 Revised Guidance | |||||
Cash cost | 620,000 | 230,000 | (10,000) | 140,000 | 80,000 | |
Cash cost per pound($/lb) | 1.75 | 2.25 | (0.25) | 1.80 | 0.55 |
Nine months ended | ||||||
Operations | Candelaria | Chapada | Eagle | Neves- | Zinkgruvan | |
($000s, unless otherwise noted) | (Cu) | (Cu) | (Ni) | (Cu) | (Zn) | Total |
Sales volumes (Contained metal in concentrate): | ||||||
Tonnes | 104,796 | 33,495 | 11,622 | 25,950 | 46,051 | |
Pounds (000s) | 231,035 | 73,844 | 25,622 | 57,210 | 101,525 | |
Production costs | 996,246 | |||||
Less: Royalties and other | (42,695) | |||||
953,551 | ||||||
Deduct: By-product credits | (466,556) | |||||
Add: Treatment and refining | 86,367 | |||||
Cash cost | 368,583 | 76,527 | (39,260) | 116,351 | 51,161 | 573,362 |
Cash cost per pound ($/lb) | 1.60 | 1.04 | (1.53) | 2.03 | 0.50 | |
Add: Sustaining capital | 226,641 | 37,856 | 12,414 | 33,348 | 28,312 | |
Royalties | — | 9,797 | 21,934 | 5,576 | — | |
Interest expense | 3,547 | 2,577 | 531 | 57 | 54 | |
Leases & other | 7,930 | 2,483 | 7,234 | 4,164 | 4,248 | |
All-in sustaining cost | 606,701 | 129,240 | 2,853 | 159,496 | 83,775 | |
AISC per pound ($/lb) | 2.63 | 1.75 | 0.11 | 2.79 | 0.83 |
Certain of the statements made and information contained herein is "forward-looking information" within the meaning of applicable Canadian securities laws. All statements other than statements of historical facts included in this document constitute forward-looking information, including but not limited to statements regarding the Company's plans, prospects and business strategies; the Company's guidance on the timing and amount of future production and its expectations regarding the results of operations; expected costs; permitting requirements and timelines; timing and possible outcome of pending litigation; the results of any Preliminary Economic Assessment, Feasibility Study, or Mineral Resource and Mineral Reserve estimations, life of mine estimates, and mine and mine closure plans; anticipated market prices of metals, currency exchange rates, and interest rates; the development and implementation of the Company's Responsible Mining Management System; the Company's ability to comply with contractual and permitting or other regulatory requirements; anticipated exploration and development activities at the Company's projects; the Company's integration of acquisitions and any anticipated benefits thereof; and expectations for other economic, business, and/or competitive factors. Words such as "believe", "expect", "anticipate", "contemplate", "target", "plan", "goal", "aim", "intend", "continue", "budget", "estimate", "may", "will", "can", "could", "should", "schedule" and similar expressions identify forward-looking statements.
Forward-looking information is necessarily based upon various estimates and assumptions including, without limitation, the expectations and beliefs of management, including that the Company can access financing, appropriate equipment and sufficient labor; assumed and future price of copper, nickel, zinc, gold and other metals; anticipated costs; ability to achieve goals; the prompt and effective integration of acquisitions; that the political environment in which the Company operates will continue to support the development and operation of mining projects; and assumptions related to the factors set forth below. While these factors and assumptions are considered reasonable by
___________________________________________ | |
1 These are non-GAAP measures. Please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the three and nine months ended |
SOURCE
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